Re-evaluating risk management in the metals supply chain

Businesses in the metals and mining industry are facing new challenges through increasing market volatility and shrinking margins imposed by globalization. Firms along all stages of the metals supply chain are affected by threats originating in the markets – from miners who produce raw materials to primary metals manufacturers, rolling mills, and recyclers.
Many are already betting on strategies to mitigate risks from changing market prices and foreign exchange rates – but too often they are doing so by employing dubious approaches and tools that could well be improved upon in terms effectiveness.

Our white paper, ’Re-evaluating risk management in the metals supply chain’, provides an introduction to up-to-date hedging, and shines a light on the range of aspects that are relevant for businesses in the supply chain. Even if the core approaches for effective hedging come down to only a few general tasks, businesses vary widely in the details, which leads them to adopt different views on the markets and resulting challenges and problems. An effective hedging strategy must pay attention to these details – with regard to both the relevant processes it is describing and prescribing and the employed hedging instruments. An appropriate implementation of defined procedures is thus just as important as the right balance between complicated and easy, and between risk mitigation and preserving chance.